Rishi Sunak has been listed as a beneficiary of tax haven trusts while setting taxes in the UK as chancellor of the exchequer, according to documents seen by The Independent.
Trusts in the British Virgin Islands and Cayman Islands, created to help manage the tax and business affairs of his wife Akshata Murty’s family interests, note Mr Sunak as a beneficiary in 2020, according to people familiar with Ms Murty’s financial affairs and evidence reviewed by this publication. Mr Sunak became chancellor in February that year, and had previously been chief secretary to the Treasury since 2019.
Documents viewed by The Independent show trusts linked to Ms Murty, her family and companies linked to their businesses. In a number of them, Mr Sunak was listed as a beneficiary.
Pat McFadden, Labour’s shadow chief Treasury secretary, said Mr Sunak being listed as a beneficiary of tax haven trusts is “extremely serious” and called for answers.
He said: “We need urgent answers from the chancellor as to why he has been linked to a tax haven. We need full transparency about this and the other stories about the chancellor emerging over the past 24 hours.”
Questions about Mr Sunak’s financial arrangements have come to the fore since The Independent revealed on Wednesday that Ms Murty had non-dom status, meaning she is not obligated to pay UK tax on foreign earnings. Sources also claim that Ms Murty, whose family business is worth £3.5bn, had created a trust which would perpetuate some of these benefits of non-dom status beyond the 15-year limit.
In a U-turn on Friday, Ms Murty announced she will now pay UK taxes on all her worldwide income, saying she did not want her financial arrangements to be a “distraction” for her husband in his role as chancellor.
A spokesperson for Mr Sunak said they “did not recognize” the claims on use of tax havens, while a spokesperson for Ms Murty declined to comment. They previously claimed that she was a non-dom as a result of being an Indian citizen, though experts pointed out that use of the tax status was her choice.
On Friday, Mr Sunak admitted he had also held a US green card while living in Downing Street. Green card holders must pay tax in America and declare their intention to make the US their permanent home.
A spokesperson for the chancellor said he had used his green card for travel purposes until October 2021 on his first US trip in a government capacity, at which point he returned it after discussion with authorities. They added: “Rishi Sunak followed all guidance and continued to file US tax returns, but specifically as a non-resident, in full compliance with the law. All laws and rules have been followed and full taxes have been paid where required in the duration he held his green card.”
Last year she collected dividends of £11.5m from her estimated £700m stake in Infosys, the IT firm set up by her father, potentially saving around £4.5m in UK taxes through her non-dom status. She has previously stated that she “has always and will continue to pay UK taxes on all her UK income”.
It comes as Mr Sunak’s popularity with voters has sunk to an all-time low, according to polls, as increases in inflation and national insurance contributions (NICs), as well as energy bills, spark a cost-of-living crisis. Mr Sunak’s spring statement last month was criticized for not doing enough to help the worst off.
Sir Keir Starmer has accused Mr Sunak was guilty of “breathtaking hypocrisy” for raising taxes while his wife benefits from non-dom status. The Labor party, the Lib Dems and the SNP have all urged the chancellor to give further details of their financial affairs, and the extent to which he may benefit personally.
While the Treasury has said that Mr Sunak declared his wife’s tax status when he became a minister in 2018 and again when he joined the department, officials told The Independent they had not been informed, and felt “uncomfortable” about the implications. The Treasury and Cabinet Office did not respond to requests for comment concerning Mr Sunak’s alleged beneficiary status in the British Virgin or Cayman islands trusts.
Tax havens have no – or minimal – taxes on companies and other corporate structures and entities. They also often offer a high degree of financial secrecy often when companies are registered there, or trusts are created as beneficiaries of companies within their jurisdiction. Their use by British residents is entirely legal.
Ms Murty may be making use of a loophole left after the tightening of non-dom status by then Chancellor George Osborne in 2015. By creating a trust as a non-dom, that entity can continue to have non-dom status even if its beneficiaries are no longer able to choose to use the option for tax benefits. The rules allowing this were brought into effect on 6 April 2017, and there is no suggestion of legal wrongdoing in this or her use of non-dom status.